Assignment: Complete accounting cycle
For the past several years, Abby Brown has operated a part-time consulting business from her home. As of June 1, 2012, Abby decided to move to rented quarters and to operate the business, which was to be known as Square One Consulting, on a full-time basis. Square One Consulting entered into the following transactions during June:
June 1. The following assets were received from Abby Brown: cash, $30,000; accounts receivable, $7,500; supplies, $2,000; and offi ce equipment, $15,000. There were no liabilities received.
1. Paid three months' rent on a lease rental contract, $6,000.
2. Paid the premiums on property and casualty insurance policies, $3,600.
4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $5,000.
5. Purchased additional offi ce equipment on account from Offi ce Depot Co., $6,000.
6. Received cash from clients on account, $4,000.
10. Paid cash for a newspaper advertisement, $200.
12. Paid Offi ce Depot Co. for part of the debt incurred on June 5, $1,200.
12. Recorded services provided on account for the period June 1-12, $13,000.
14. Paid part-time receptionist for two weeks' salary, $1,500.
17. Recorded cash from cash clients for fees earned during the period June 1-16, $9,000.
18. Paid cash for supplies, $1,400.
20. Recorded services provided on account for the period June 13-20, $8,500.
24. Recorded cash from cash clients for fees earned for the period June 17-24, $6,300.
26. Received cash from clients on account, $12,100.
27. Paid part-time receptionist for two weeks' salary, $1,500.
29. Paid telephone bill for June, $150.
30. Paid electricity bill for June, $400.
30. Recorded cash from cash clients for fees earned for the period June 25-30, $3,900.
30. Recorded services provided on account for the remainder of June, $2,500.
30. Abby withdrew $10,000 for personal use.
Instructions
1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
11 Cash
12 Accounts Receivable
14 Supplies
15 Prepaid Rent
16 Prepaid Insurance
18 Offi ce Equipment
19 Accumulated Depreciation
21 Accounts Payable
22 Salaries Payable
23 Unearned Fees
31 Abby Brown, Capital
32 Abby Brown, Drawing
41 Fees Earned
51 Salary Expense
52 Supplies Expense
53 Rent Expense
54 Depreciation Expense
55 Insurance Expense
59 Miscellaneous Expense
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trial balance.
4. At the end of June, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
a. Insurance expired during June is $200.
b. Supplies on hand on June 30 are $600.
c. Depreciation of office equipment for June is $250.
d. Accrued receptionist salary on June 30 is $350.
e. Rent expired during June is $2,500.
f. Unearned fees on June 30 are $3,200.
5. Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet.
6. Prepare an adjusted trial balance.
7. Prepare an income statement, a statement of owner's equity, and a balance sheet.
8. Prepare a post-closing trial balance.